Cell phoners bidding farewell to fixed lines

By : |February 12, 2002 0



Peter Henderson

SAN FRANCISCO: Caught in the headache of moving apartments, New Yorker Brian Moss put
off signing up for a new local phone. That was six months ago, though, and the 23-year-old
investment banker is glad he never bothered.

Joining a growing crowd of mobile youth tired of dealing with local phone companies
that they say treat customers like children, Moss gave up on his old-fashioned
"fixed-line" service provided by Verizon Communications.

"It’s kind of an epidemic," says Moss, who estimates a fifth of a new crop of
employees hired at his company have no home phones. "You are never home. I am
available to take calls at home probably two hours per day. Even when I had a land line,
people called my cell phone," he says.

For Internet surfers, who get all the access they need at work or have moved to
high-speed cable Internet, a local phone sometimes is not worth the hassle. Fixed lines
still dominate the telephone business — but competing new technologies are starting to
show up on the radar of research firms. Already, Forrester Research estimates that
"new communications options" have displaced telephone service at 1.7 per cent of
US households.

In part, the growth of the alternative communications market reflects frustration over
the rising costs and service complaints linked to local phone service. Years of
deregulation have been a disaster, advocacy group Consumers Union said in a recent report,
noting that local phone charges had increased 17 per cent since deregulation six years
ago.

Long distance rates have fallen, but monthly fees leave many consumers shortchanged,
and major carriers are about to raise rates, Consumers Union says. The advocacy group
isn’t happy with wireless service, either. It says many consumers cannot switch to
wireless phones because of price.

But Kevin Walker, 24, who got used to making long-distance calls exclusively by
wireless phone while in college, doesn’t have any big complaints about cell phones —
seeing the service as a basic part of his lifestyle.

"Essentially we are right at that cusp, that generation, where cell phones became
a primary necessity," said Walker. He leaves for work at 7:30 a.m. each morning and
returns about 7:30 p.m. A half hour later, at 8 p.m., the free evening and weekend minutes
part of his plan kicks in.

"I can use it ’til I’m blue in the face," he said. "If you call at the
right time it comes down to less than a cent a minute."

Moss, whose company pays for part of his telephone service, says he speaks more often
for shorter periods of time now that he is all-wireless, encouraged by mobility and
discouraged by the relatively poor reception.

But Walker says the quality problems do not cut his short his long distance
conversations. "I’d say they last longer, because there is no worry about
price," he says.

Both says they were happy to leave stodgy local phone companies behind. "I’ve
never trusted land line services," Walker said. Cell phone providers compete more and
try harder, he says.

Phone companies SBC Communications Inc. and Verizon Communications take exception to
cracks about local phone service, but spokesmen for both said they have customers who are
ripping out land lines. Not that it matters to their bottom lines — both can catch
defectors with their huge wireless divisions.

Fixed line service isn’t just facing competition from cell-phone-only customers.
Increasingly, "broadband," or high-speed Internet-based services also are
draining away telephone subscribers. Forrester estimated that mobile and high-speed
broadband combined will provide primary service for five million households by 2006.

The International Telecommunication Union estimated that there were 1.045 billion fixed
lines at the end of 2001, compared with nearly 1 billion mobile phones, and Forrester
forecast that in 2003 growing U.S. wireless revenue, at $66.6 billion, would overtake the
declining total of long-distance and local, seen at $17.5 billion and $40.6 billion.

Broadband high-speed Internet would overtake long-distance two years later, Forrester
forecast.

Honey, internet for you!

Broadband may get a boost before that, though, argues Net2Phone Inc.<NTOP.O>, a
leader in technology which converts speech into data that can be carried over the
Internet, called Voice over Internet Protocol.

Net2Phone lets users call telephones from their PCs and also sells its services to
regular phone carriers, unbeknownst to their subscribers, says spokeswoman Sarah
Hofstetter.

She is part of a trial in New York that solves quality problems and a major problem
with Internet phones — the inability to receive calls.

Net2Phone’s trial service, which it hopes to sell to cable companies, gives users a
regular telephone number and a phone that hooks right into a cable modem, bypassing the
computer. The basic plan offers 250 minutes for $10 a month.

"When you take the PC out of the equation, the call quality goes up
significantly," she says. "The technology is there… I use it as my home office
phone line. Nobody ever asks me if I’m calling from a cell phone."

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